Technical vs Fundamental Analysis

Maya, who runs a burger restaurant and is learning to invest, had her cream walls repainted last week. On a quiet morning before opening, she finds two articles about Asian Paints: show the note on Asian Paints · NSE: ASIANPAINT, the company whose paint covers walls across India. One says the business is getting stronger; the other says its share keeps falling.

The first article reports what the business did: from April to June 2026, Asian Paints sold 17.9% more than a year before and earned 40% more for its shareholders (results filed with the exchanges on 29 July 2026). The second reports what the share did: it closed at ₹2758.40 that day and at ₹2284.60 on 28 October 2026, 17% lower (derived). Each article also chose a window: a quarter against the same quarter a year before, and three months of prices. Chapter 4 shows why that choice matters.

Fundamental analysis is studying the business behind a share (what it sells, earns, owns and owes, and who runs it) to judge what the business is worth. Technical analysis is studying the share's price and trading on a chart, to see what buyers and sellers have done. "Fundamental" here means "about the business underneath", not "basic".

They ask two questions. The business lens asks: what is this business worth, and how does the price compare? The price lens asks: what are buyers and sellers doing with this price, and where have they acted before? They read different evidence, the company's filings and the exchange's record of trades, so they can point in opposite directions on the same day.

A price is what the next buyer will pay today, and buyers pay for what they expect: show the note on 29 May 2026: profit up 69%, share 30 paise lower, not only for the last quarter. Maya has seen this at her own counter: the new buyer paid ₹1.5 lakh for a tenth of her restaurant because the full dining room told her what the months ahead might bring (the first lesson). Why prices move is the subject of what moves share prices.

A share is a piece of a business, as the first lesson showed, so the business lens starts with the business, not the share price. Over years, what the business earns is what its owners share in, through dividends and through the value of their piece.

It asks four questions, and Asian Paints answers each in a dated document. What does it sell, and who pays? Paint for homes, coatings for industry, and home décor (kitchens, bath fittings, lights), from 25 paint factories, to customers in over 60 countries. Is it selling and earning more? In the year to March 2026 (India's financial year, FY26) its revenue, the money from its sales, was ₹35584 crore, up about 5%, and its profit for shareholders ₹4325 crore, up 17.9%; from April to June 2026, sales rose 17.9% and profit 40%. What does it owe, and does its profit turn into cash? The balance sheet and the cash flow statement answer that, and reading an annual report shows how. Who runs it, and who owns it? A board and its managers run it; the founding families' group, called the promoters: show the note on Promoter, owns about 53% of the shares.

All four feed one question, the reason the lens exists: what might the business be worth, compared with its price? That answer is an estimate built on assumptions about years ahead; how to research a stock shows the basics.

Where the evidence lives. Listed companies in India file their results with the exchanges every quarter under SEBI's listing rules, and publish an annual report and a shareholding pattern. Anyone can read them free on NSE, BSE or the company's own site. In the US, the same evidence sits in the quarterly 10-Q and the yearly 10-K filed with the SEC. A business reader also reads the industry and the economy around the company.

The company's own warnings are evidence too. In July 2026, the release that reported the 40% also named "volatility in raw material prices" as something to watch; in May it named uncertainty in demand from the West Asia conflict. A careful business reader writes these down beside the 40%.

Its central assumption: over years, a share's price tends to follow what the business earns; over months it may not, and for a given share the long run may never come: show the note on Security Analysis. Chapter 6 shows what happens when the numbers themselves are wrong.

Every trade on the exchange leaves a record: the price, the number of shares, the time. NSE publishes each day's record in a file called the bhavcopy: show the note on Bhavcopy. A chart draws that record over time: price up the side, time along the bottom. Each candle is one day: where the price opened, how high and how low it went, and where it closed.

The nearest thing in Maya's restaurant is her till roll: every sale, its price, its time. It tells her what customers paid, never why they came. Where the comparison stops: Maya sets her own prices; on an exchange, every price is agreed between a buyer and a seller, trade by trade.

What the price lens reads in Asian Paints' year to 28 October 2026: the path (a high close of ₹2968.50 on 5 December 2025, down to ₹2121.30 on 23 March 2026, up to ₹2810.00 on 3 August, down to ₹2284.60); where rises and falls paused; and how much traded.

Results day, as the chart saw it. On 29 July 2026 the share rose as much as 4.7% during the day, to ₹2864.00, then closed only 0.8% higher, at ₹2758.40, on about 4.6 times the average volume of the 20 sessions before (derived). The chart shows that many shares changed hands and that the early rise did not hold. It does not show who sold, or why.

Its assumptions, as Dow theory: show the note on Charles Dow and the textbooks after it set them out: the price already reflects what traders know and expect; prices tend to move in trends; people react to similar situations in similar ways, so shapes repeat. Each is an assumption, not a law, and chapter 6 shows where they fail. In short, the price lens cares more about how the price moved than why.

Many technical analysts also use indicators, calculations made from price and volume. This course reads price and volume directly, which is called price action; Charts & Price Action teaches it.

Take one end point, Asian Paints' close of ₹2284.60 on 28 October 2026. From a month earlier it is down 5.6%; from a year earlier, down 9.0%; from five years earlier, down 26.7%; from ten years earlier, up 113.5% (derived; prices only, dividends not included). Every one of these is a fact.

The second article counted from results day: three months, down 17%. Started ten years back, its headline would have said the opposite. Neither start is wrong; each answers a different question. Someone planning a trade of a few weeks looks at the last few months; someone thinking about owning a business for years looks at years (trading vs investing compares the styles).

The business lens has windows too. April to June 2026: profit up 40.0% on a year before. The year to March 2026: up 17.9%. A big percentage can also come from a weak starting point, so read what it is measured against.

Check the scale. Two charts drawn the same height can hold a 5% move and a 113% move. Read the numbers on the side before you compare shapes.

Write your window down before you look, and say it whenever you quote a number. (Charts & Price Action shows how one chart can be drawn by the day, the week or the month: the other meaning of "timeframe".)

Start with Maya's own books. "We sold 4000 burgers last month" is a fact: her till roll says so. "Next month will be busier because of the festival" is an assumption: no one can check it yet. "Customers love the new burger" is an interpretation: sales also rise when rain keeps people at home, ordering delivery.

The same three, for a share. A fact can be checked in a dated source: "Asian Paints closed at ₹2284.60 on 28 October 2026." An assumption is about the future, and no one can check it yet: "Profits will keep rising." An interpretation is a reading of facts that another careful person could read differently: "Sellers are in control."

Now the two articles Maya found. Every number in both is a fact; both headlines lean on interpretations; both last lines are assumptions; and each chose its window (chapter 4). Neither article lies. Each mixes the three, in one confident voice.

Three steps for any article. First, mark the facts, and find each one's source and date. Second, mark the assumptions, and ask what would have to happen for each to come true. Third, mark the interpretations, and ask what else could explain the same facts.

25 October 2017. Yes Bank, a private bank listed in India, told the exchanges that the RBI, India's central bank and its bank regulator, had fined it ₹6 crore, partly for not following its rules on how to classify bad loans.

26 October 2017. Its results release ran to nine pages. Page 1 led with profit up 25.1%, and the chief executive's reading that the bank's asset quality "continues to demonstrate resilience": an interpretation. Page 9, the last, carried the facts from the RBI's inspection: at 31 March 2017 the bank's bad loans (loans whose borrowers have stopped repaying; banks call them non-performing assets: show the note on Non-performing asset (NPA), NPAs) were ₹8373.8 crore by the RBI's count, against the ₹2018.6 crore the bank had reported: about four times as many (derived). With them counted, that year's profit would have been ₹2316.1 crore, not ₹3330.1 crore. Newspapers reported the gap the next morning.

The chart, after one bad day, kept climbing. The bad day was 27 October: the share fell 7.3%, to ₹307.05. Over the ten months that followed it rose 28%, to a record close of ₹394.00 on 20 August 2018. Nothing on a chart shows a loan book.

19 September 2018. The bank disclosed that the RBI would let its chief executive stay only until 31 January 2019. On 21 September (the 20th was a market holiday) the share opened 10% lower and closed 29% lower, at ₹226.50; reports that day tied the fall to the RBI's decision.

The fall went on. By 28 September the share was at ₹183.65, less than half its record. On 5 March 2020 the RBI replaced the bank's board with an administrator, citing "serious deterioration in the financial position", and the government capped what depositors could withdraw at ₹50000 an account. On 6 March the share closed at ₹16.15: 91% below that September close and 96% below the record (derived). On 28 October 2026 it closed at ₹15.61.

What each lens got wrong here. The price lens: for ten months after the warning, the chart went to a record; a chart cannot read a loan book or a regulator's report. The business lens: a reader who stopped at page 1, the headline profit and the chief executive's reading, built on numbers the regulator had found understated; the facts were on page 9. And after the break, a share that has halved can still lose most of what is left: "low price" is a fact, "cheap" is an interpretation.

Neither lens is useless. Each held something the other could not: the filing held the warning, the chart held what the market did with it. Chapter 7 puts them together.

The usual errors of each. The business lens can arrive late (Asian Paints' April to June results came on 29 July), rest on numbers that are incomplete or wrong (read the notes: How to Read an Annual Report), rest on assumptions about years ahead (How to Research a Stock), and be right about the business while waiting years for the price to agree. The price lens can show lines and shapes that look clear only afterwards (Charts & Price Action), fail when the price jumps past a level, since a stop is not a promised price (Risk Management 101), say nothing about why, and look surer than it is when several signals are built from the same prices. Both can fall for seeing only what agrees with you, and for switching methods to defend a position (Trading Psychology).

People combine the lenses in different orders. Some start with the business and use the chart to plan when to act and where they would be wrong; some start with a chart and read the filings before acting; some use one lens only. What matters is that each claim stays inside what its lens can see.

A routine in five steps. First, write down your question and your window (trading vs investing). Second, the business lens: what would you own? What it sells and earns, what it owes, who runs it (How to Read an Annual Report and How to Research a Stock). Third, the price lens: what is the market doing with it over your window, its direction, where it paused, how much traded (Charts & Price Action).

Fourth, where the two agree or disagree, find your place on the grid below and ask its question. Write both readings down, and what would change your mind. A disagreement is information, not an instruction. Fifth, before any money moves, decide how much you could lose and where you would get out (Risk Management 101); then review on a date you set (Your Routine).

Where the two lenses meet. The price-to-earnings ratio: show the note on P/E (P/E) divides a share's price (from the price lens) by its profit per share, called earnings per share or EPS (from the business lens): it says how many rupees buyers are paying for each rupee of a year's profit. On 28 October 2026, Asian Paints' was about 51 on its last full year's profit (₹2284.60 ÷ ₹45.12, derived); apps that use the last four quarters show a different figure. Whether it is high or low is a question for How to Research a Stock.

The grid, with real cases. Asian Paints, since 29 July 2026, sits where the filings improve and the price falls. Yes Bank moved: from a problem in the filings while the price rose (October 2017 to August 2018) to both showing a problem (September 2018 to March 2020). A share can change places, and neither lens knows when.

Each lens is only as good as your reading of its record, and this course reads the price lens's record first: the chart. What is it actually showing, candle by candle? That is the next lesson.